Crenshaw v. Williams

• Decision Date: 20 May 1921
• Citation: 231 S.W. 45,191 Ky. 559
• Parties: CRENSHAW v. WILLIAMS.
• Court: Kentucky Court of Appeals

231 S.W. 45

191 Ky. 559

CRENSHAW v. WILLIAMS.

Court of Appeals of Kentucky.

May 20, 1921

Appeal from Circuit Court, Scott County.

Action by J. W. Crenshaw against D. W. Williams. Judgment of dismissal, and plaintiff appeals. Affirmed.

Ford &amp Ford, of Georgetown, for appellant.

Bradley & Bradley and James Bradley, all of Georgetown, for appellee.

THOMAS J.

On January 19, 1920, appellee and defendant below, D. W Williams, signed a contract, agreeing to convey to the appellant and plaintiff below, J. W. Crenshaw, on March 1 thereafter, a tract of land in Scott county containing 398 1/2 acres, the consideration being $400 per acre, amounting in the aggregate to $159,400. Ten per cent. of the purchase price, or $15,940, was paid at the time, and 40 per cent. of the consideration was to be paid at the date of the deed, and the balance was to be divided into two equal payments evidenced by notes of plaintiff, and payable in one and two years thereafter, with interest from date and a lien upon the land. On the appointed day for the execution of the deed, or perhaps before that time, it was discovered by plaintiff that defendant could not convey a perfect title, and the executory contract for the sale of the land was not performed according to its terms.

This suit was brought by plaintiff against defendant on April 22, 1920, seeking to recover damages for the failure of the latter to make the conveyance, which consisted of interest on the 10 per cent. payment at the time of the contract, and $310, alleged expenses incurred by plaintiff in surveying the land and in examining the title thereto. In the third paragraph of the petition it was alleged that the land at the time of the contract, as well as at the stipulated day for its performance, was reasonably worth on the market $179,400, and that plaintiff had sustained damage because of the "loss of his bargain" in the sum of $20,000. Besides alleging defendant's failure to convey, it is also averred in the petition (but in paragraphs other than the third) that defendant "fraudulently failed to disclose to this plaintiff at the time of the execution of said contract" his inability to convey a perfect fee-simple title to the land. Afterwards an amended petition was filed, setting up the defect in defendant's title, which was that the title to the land of defendant and his wife, emanated from the will of J. B. Graves, her father, and in which he devised the property involved to Mrs. Williams during her life and after her death to her children. The answer averred, inter alia, that plaintiff knew of the condition of the title before and at the time of the execution of the contract sued on; that Mrs. Williams was at an age where in the ordinary course of nature she would bear no more children, and that she was the mother of two children, one of whom died without descendants, and that she inherited his interest, and therefore became the owner of a one-half undivided interest in remainder to the land in question after the expiration of her life estate, and that her only other child (a daughter) had joined with herself and husband in a deed to plaintiff, which he declined to accept, and that defendant had returned to plaintiff the 10 per cent. cash payment, made by him at the date of contract, with interest thereon, and by mutual agreement of the parties the contract was rescinded. The demurrer filed to the answer was sustained, but the one filed to the petition as amended was overruled as to the first and second paragraphs, but it was sustained as to the third paragraph, seeking to recover damages for the loss of plaintiff's bargain, and, plaintiff declining to amend that paragraph, it was dismissed, to which he excepted and prayed, and has prosecuted an appeal to this court. Plaintiff dismissed his action, seeking a recovery of the interest on the 10 per cent. cash payment (since it had been paid), and the court gave judgment in his favor for a part of the other damages claimed. Defendant has not appealed therefrom, nor has he appealed or moved for a cross-appeal from the judgment of the court sustaining a demurrer to his answer, and none of the questions involved therein are before us.

It will thus be seen that the sole question for determination is whether plaintiff may recover substantial damages under the facts presented for what is known in the law as "the loss of his bargain"; i. e., the excess market value of the land above what he agreed to pay for it. If this question had been submitted to us without investigation, we should have unhesitatingly said that plaintiff was entitled to recover such damages; but our investigation has shown that the courts generally, including this one, deny such recovery in the sale of real estate where the vendor acts in good faith, and is guilty of no positive or active fraud in the transaction.

Approaching the question in somewhat reverse order, and addressing ourselves for the moment to what we term an exactly analogous question, it may be confidently stated that this court, from its beginning, has uniformly held that the measure of damages upon a breach of warranty of title contained in a deed is the value of the land at the time of the conveyance, if the entire title failed, or the proportionate part of that value which the acreage of the land lost on account of the breach bore to the entire acreage of the tract, and other items of expense resulting proximately from the breach; and that, in the absence of some showing to the contrary, the value of the land entering into the measure of the damages in such cases was the consideration paid or agreed to be paid. In no case has this court permitted the recovery in such cases of any increase in the market value of the land above that which was agreed to be and was actually paid. New Domain Oil & Gas Co. v. McKinney, 188 Ky. 183, 221 S.W. 245 (and cases therein referred to); Helton v. Asher, 135 Ky. 751, 123 S.W. 285; Sullivan v. Hill, 112 S.W. 564, 33 Ky. Law Rep. 962, and Robertson v. Lemon, 2 Bush, 301. If no other value may be taken into consideration in estimating the damages to the covenantee in a suit by him upon the breach of a warranty actually made than that agreed upon by the parties as a consideration for the conveyance of the land, it is difficult to perceive the reason for the application of a different rule where the obligation sued on, instead of being an executed warranty, is only an agreement to execute one. It is the absence of any semblance of logical distinction between the two cases that influenced the English courts in an early day, and the courts of most of the states of the Union, including this one, to adopt the rule first above stated, i. e., denying substantial damages because of increased market value of the land in a suit for the breach of a contract to convey it where the vendee was guiltless of active fraud and acted in good faith. The earliest English case coming under our observation so holding is Flureau v. Thornhill, 2 W. Bl. 1078. That case has since been followed by those of Pounsett v. Fuller, 17 C. B. 660; Walker v. Moore, 10 Barn. & C. 416; Sikes v. Wild, 1 Best & S. 587; s. c., 4 Best & S. 421; Bain v. Fothergill, L. R. 6 Exch. 59; s. c., L. R. 7 H. L. 158; Engell v. Fitch, L. R. 4 Q. B. 659, 10 B. & S. 738, and Jones v. Gardner, 1 Ch. 191, 71 L. J. Ch. 93, 86 L. T. Rep. N. S. 74. In support of the above rule and for a list of cases, both English and American, supporting it, we refer to the note to case of Beck v. Staats, 16 L.R.A. (N. S.) on page 771; 39 Cyc. pp. 2105-2111, inclusive, and 27 R.C.L. 633-634. In the last work cited, in stating the general rule, the text says:

"A distinction is usually made as regards the general damages recoverable between cases where the vendor acts in good faith in entering into the contract and cases where good faith is wanting. In the former case it is held that the measure of damages is the amount of the purchase money paid with interest, thereby denying to the purchaser any recovery for the loss of his bargain. This is the rule laid down in the early English case of Flureau v. Thornhill (2 W. Black, 1078) decided in 1775 and subsequently followed in that country, and has been adopted in most jurisdictions in this country, and in Canada."

See, also, note to the case of Ontario Asphalt Block Co. v. Montreuil, Ann.Cas. 1917B, 852, on page 860. The above authorities, in addition to containing references to cases from the courts of various states of the Union, England and Canada, also show that some of the states have adopted the rule by statute.

Coming now to the opinions in our court the first case directly in point seems to be that of Allen v. Anderson, 2 Bibb, 415, which was a suit on a contract similar in all respects to the one now under consideration. After referring to the case of Cox's Heirs v. Strode, 2 Bibb, 276, 5 Am.Dec. 603, which was a suit for breach of warranty of title, and in which it was first held that the value as fixed by the consideration agreed to be paid should measure the criterion of damages, the opinion says:

"On a covenant to convey, where the vendor is without fraud incapable of making a title, the rule should be the same. In either case, the real damage the party has sustained is the purchase money, with interest from the time it was paid. In reason there exists no distinction between the two cases; a purchaser before the seller completes his engagement is not entitled to compensation for the fancied goodness of his bargain, which he may suppose he has lost, more than he is after it is completed. As to the damages that ought to be recovered on a covenant to convey, see the case of Flureau v. Thornhill, 2 Black, Rep. 1078."

The next case directly in point is that of Rutledge v....